Washtech.com: The E-learning Revolution
Guest: Matthew Pittinsky, chairman of Blackboard Inc.
Wednesday, Dec. 5, 2001; 1 p.m. EST
During the height of the late 1990s Internet boom, it was not uncommon to hear tech entrepreneurs predicting that the Web would reinvent nearly every form of business. The post-2000 tech bust quashed some of that rhetoric, but there are still sectors where Internet technology is taking root and changing the historical business practices. Education is one of those areas.
The Washington region is becoming a major center for "e-learning," a sector that encompasses everything from applying Internet technologies to traditional schooling and test preparation to offering Web-based continuing education and workplace seminars to professionals.
Our guest is Matthew Pittinsky, chairman of District-based Blackboard, a growing e-learning firm that targets its products at academic institutions. A graduate of the Harvard Graduate School of Education and reared in a family of educators, Pittinsky saw the need for an open standard platform powering online learning environments in the academic market and was an early member of the EDUCAUSE IMS standards project. At Blackboard, he develops the company's corporate and product strategy and serves as the company's chief liaison to the education and financial communities. Last year, Washington Techway magazine named Pittinsky among the area's top under-30 technology executives.
Join Pittinsky for a one-hour live online discussion starting at 1 p.m. EST, Wednesday, Dec. 5, 2001. The discusion will be moderated by Wasthech.com reporter Michael Bruno. Pittinsky and Bruno will discuss the latest developments at Blackboard and, more broadly, the future of e-learning.
The edited transcript follows.
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Our chat today with Matthew Pittinsky starts in about 15 minutes, and we've already received some great questions. Please keep them coming!
Matthew Pittinsky: Thanks for having me.
I'd like to start the session by asking whether Blackboard has seen a jump in business since the terrorist attacks? If so, is this a permanent increase in business?
Matthew Pittinsky: Interesting question. Because we focus on the academic market, we generally benefit from clients who see enrollment and revenue increases during tough economic times. So yes, our business has continued to outperform our budget targets at the same rate after 9/11 as before. Beyond the benefits of our market, Blackboard sells a commerce and access technology for colleges and universities that essential provides the security and debit account functionality behind student ID cards on campus. So not only have we not seen a slowdown from our historical rates, we also have a product that specifically addresses the security needs of institutions which naturally is an area of focus since 9/11. And to the extent that e-Education allows for the delivery of education without being on campus, at times of uncertainty with travel, etc. it helps as well. A long answer to a short question :-)
Why do you think an e-learning experiece -- be it a college course or a professional development class -- is as rewarding (or more so) than traditional in-person education?
Matthew Pittinsky: I am not someone who believes that the question is: Which is better? Both traditional education and e-learning have unique strengths and weaknesses. E-Learning opens broader access, more personalized education delivery, better tracking of student participation, etc. Its different and at times more suitable; at times less.
I keep hearing that D.C. is an e-learning hub. Do you think that's the case? Why so?
Matthew Pittinsky: The term Hub has meanings, but yes I think it would apply. Blackboard’s technology brings together a range of Web services on the campus into one place for students. And it brings institutions together which provide distance learning into one place for students. So I do think the hub term applies.
Who's your biggest competitor?
Matthew Pittinsky: Blackboard licenses a suite of three major enterprise systems. No company competes with us in all three, but we do have competitors in each -- learning, community portal and student commerce. Since 1997, we have grown into the financial and marketshare leader in our learning and commerce businesses. And we have a strong foothold in the campus portal market as well.
Silver Spring, MD:
Your bio mentions the EDUCAUSE IMS project. What was that?
Matthew Pittinsky: Educause is an association of almost all colleges and universities in the country in the area of higher education IT. IMS is a standards project that Educause sponsored to help create open standard on which e-Education systems can be built for greater interoperability. We helped define those early standards and are leading implementors which is important to our clients.
Blackboard is not a public company, yet you occasionally report your financials. Are you reporting to the same standards as companies that have issued stock to the public?
Matthew Pittinsky: Good question. Yes, I think so. We are audited with the same approach as public companies and our finance team includes veterans of many large public companies. We follow accepted standards, although as a private company we are not regulated as closely in some of the qualitative comments we make about our future growth.
Has the new Bush Administration shown more interest in e-learning than Clinton's team? Are you looking to government in any way to foster the e-learning sector?
Matthew Pittinsky: I wonder if this is a softball question! In fact we are seeing tremendous uptake of e-Learning by the government, including two big wins by Blackboard with the Navy and Army. e-Learning is a great way to get degree granting higher ed course out to soldiers all over the world.
In your opinion, do you think that eLearning will help to improve both teacher/student performance in all levels of education? If so, how?
Matthew Pittinsky: Student performance is the name of the game! I do believe that e-Learning, in conjunction with or independent of a traditional classroom, has unique strengths in the areas of content, tracking, student profile, collaboration, self-paced learning, etc. that will give a new set of pedagogical options to teachers. But training matters a lot and its still early.
What do you see as the major technological
trends that will power the post-dot-bomb era of
Web-focused companies? Will it be Web services,
as in Microsoft's .NET vision? Will it be something
else, less well articulated and not yet on the radar
Matthew Pittinsky: I think Web services is certainly an important technology trend. The desktop and Web are blurring, and the overall Internet experience is becoming more integrated. But let's not forget the less glamorous stuff. When it comes to e-Learning, ease of use for faculty and students matters most. And technology is still too difficult to use. We work hard to make ease of use our reason for existence.
Many people want to know...when will Blackboard go public? The company once planned to go public this year, but then returned to venture investors. Will you seek another round or go next to an initial public offering of stock? And when?
Matthew Pittinsky: We are fortunate to have been able to tap over $100 million from great private investors such as Microsoft, AOL, Carlyle Group, Novak Biddle, Oak Hill and others. So for us an IPO is about tapping additional financial resources, which right now we do not need. As the industry consolidates, having a public stock can help do M&A deals. At the same time, we have done 4 acquisitions since 1997. So we do not get hung up an IPO except as it ties to being able to implement our business plan. We are larger than most of the public e-learning companies and benefit from the flexibility that remaining private provides.
You're an entrepreneur. What advice would you give to people like yourself who have technology-oriented business ideas? Is this market one in which a start-up can survive?
Matthew Pittinsky: My #1 piece of advice is have a passion for the idea. Never have I met a successful entrepreneur who simply wanted to create a business and thought up an idea. Know your market, have a passion for your technologies potential and clearly articulate client ROI. Also, bill and collect!
Mt. Vernon, VA:
Why do I keep seeing the University of Phoenix everywhere online these days?
Matthew Pittinsky: University of Phoenix Online is a publicly traded for-profit online university (UOPX). They are the largest and one of the most successful. As such, they do a lot of marketing and have been written up in lots of publications.
What fruit did the recent acquisitions of AT&T
CampusWide and CEI SpecialTeams bear?
Didn't Blackboard end up just firing most of the people and
liquidating the assets from these other
Matthew Pittinsky: I am not sure of the tone, but happy to answer. We did not fire folks from either company. In fact, we offered full positions to everyone. One of the companies was in South Dakota; the other in Phoenix. We consolidated the businesses in Phoenix and some staff decided not to move, although the vast majority did. Just want to make sure the record is set straight. The combined staff in Phoenix have been a great addition to Blackboard and a key reason for our continued growth.
Mr. Pittinsky, thanks for taking a stab at my 'hub' question. I'm curios -- why do you think Washington, D.C., is becoming the home for so many different companies seeking to enter the e-learning space? Is it just that the government is such a big buyer of e-learning? Or are there other attractions?
Matthew Pittinsky: I think it makes sense for Washington, D.C. to become the e-Education hub. First, we have most of the major education associations here. (NEA, Educause, etc.) Second, we have the US Government (Department of Education, etc.). Third, we have several major universities. Fourth, we have big companies such as Sylvan and Blackboard in the area. And Fifth, we have the public-sector oriented HQ of major companies like KPMG, Oracle, etc. here which is where higher education is usually located.
Blackboard has been pegged an e-learning leader by analysts and others. BUT, the company has concentrated on serving academia and many of us want to know if and how Blackboard will diversify into other sectors such as the corporate world?
Matthew Pittinsky: A key ingredient to our growth has been focus. We have a huge untapped market to tackle in the U.S. school, college and university space. Not to mention the international academic market, which is five times the size and which provides nearly 20% of sales. So our expansion beyond academe has been in areas where we have leadership and a record of success. For example, we formed the Government Solution Group to build on the success we have with the military and projects such as IRS e-Learning. One step at a time. Client service matters most!
What characteristics differentiate your target customers from the more general consumers of e-services or products?
Matthew Pittinsky: The academic market helped create the Internet, is very savvy and has a unique mission to not just improve top and bottom line performance, but to educate successfully. It is very different and exciting to help make the Internet useful for improving education.
Are you looking to do more acquisitions in 2002?
Matthew Pittinsky: The market is consolidating, and our leadership allows us to pick and choose from opportunities that arise. So no specific plans, but I would not rule it out.
Falls Church, VA:
So, you going after more venture capital? Are your current VCs happy?
Matthew Pittinsky: We have wonderful investors who have always taken a company-building approach. We are fully capitalized to meet our cash flow and GAAP profitability targets. So any additional capital would simply be additive – no formal plans.
Is there a trade association for e-learning firms, or do you consider yourself just another company seeking to service the education sector?
Matthew Pittinsky: We consider ourselves an education company. Always have, always will.
Riverdale Park, MD:
Hello Mr. Pittinsky,
Judging by your picture, you look too young to remember the advent of Apple's Macintosh. The Mac didn't catch on as much as Apple hoped---in part because Apple wouldn't share the Mac's operating system with potential third-party software providers.
How closely does Blackboard guard its basic operating programs?
Matthew Pittinsky: Good question. Please check out BuildingBlocks.Blackboard.com – it describes our open architecture strategy and developer programs for encouraging a marketplace of apps that run on Blackboard. And it has been wonderfully successful so far. As an aside, I remember the 1984 ads quite well. Although I grew up on an Atari 800, then Atari 1040st (GEM GUI) computer.
First, are you targeting vertical markets (other than education and government) as part of your go-to-market strategy?
Second, are there other horizontal applications for the Blackboard platform?
Matthew Pittinsky: Blackboard's suite of applications can support e-Education projects in various markets: publishing, test prep, traditional institutions, government, associations, corporate training, etc.
My personal pet peeve is Web sites that do
not allow for good access to people with
disabilities. What is Blackboard's approach to
making their products accessible to people who
use screenreader or screen-magnifier
Matthew Pittinsky: Great question. By law, and given the nature of higher ed instituions which work hard to be open to all, we are very sensitive to these issues. Our web site has a link to more info. http://products.blackboard.com/cp/Blackboard5/access/index.cgi
We've reached half time, but there's no goofy Hollywood show. Please keep the questions coming because Mr. Pittinsky is tackling them all well.
When you're trying to recruit a new academic institution customer, what are some of the biggest sales challenges that you face? Are there institutional roadblocks or other types of resistance that you face?
Matthew Pittinsky: Its interesting. The media too often portrays the adoption of e-Education as luddite faculty vs. Internet smitten administrators. Its simply not the case. We almost always show up on campus because faculty have voted with their browsers and feet and have adopted the Web in their teaching. Our technology enables these activities to scale up on a commercial system that can integrate with ERP apps, run content from major textbook vendors, etc.
Several years ago Mark Andriessen the founder of Netscape said that client-side Java applets do not work.
Do e-learning companies such as your own try to use Java applets to deliver their product?
If so how have you handled the reliability and download times issues?
Matthew Pittinsky: We use server side Java, but do not do much with client side Java as a result of there still being cross platform issues and bandwidth. We are very excited about MSFT.net
Okay gang, half time here, but there's no time for a goofy Hollywood show. Please keep the questions coming because Mr. Pittinsky is tackling them all well.
I heard that Blackboard is looking at overseas markets. What's your biggest obstacle in taking this product out of the U.S.? Language?
Matthew Pittinsky: Yes, as I mentioned earlier we generate 20% of sales and 10% of revenues (approx) from overseas. We are internationalizing our product as I type and have seen great uptake. Our international business has five times the revenues of our closest competitor and for the most part it is US-based companies that are gaining traction abroad. I guess our biggest channel is putting in place the operational infrastructure necessary to scale up sales, support, marketing, etc at a time when we are managing cash as the previous commodity it is. Demand is great.
I read that Blackboard has started a group to sell to the government. Do you believe Blackboard will benefit by the increase we are seeing in government spending?
Matthew Pittinsky: Yes on both fronts. We are seeing e-Learning connected to areas of the government getting more funds. For example, the creation of distance learning courses online in key exotic languages that have limited faculty available to teach. We are bullish about the market and have seen great ROI at the early projects.
Blackboard recently laid off around 10% of its
workforce. Does this mean the company is
experiencing a general period of contraction? As
an investor evaluating companies who may IPO in
the near future, how much growth do you forsee,
really, in the higher education sector? What
plans, if any, does Blackboard have to diversify its
Matthew Pittinsky: Another tough question, but happy to answer. We continue to add staff, experienced growth from Q2 to Q3 and have exceeded all of our sales forecasts to date. Our one staff reduction followed an exponential growth in headcount and reflected a realignment of priorities internally. We are very fortuante to be a technology company that continues to grow at or above historical rates, thanks in large part to the nature of our academic market and the ROI for clients.
How would you describe your marketing and public relations strategies?
Matthew Pittinsky: Ineffective, if you have to ask :-) -- just kidding. We focus on telling the story about the potential of the Internet for improving education. Second to that, we then educate our various audiences about our role as the underlying operating system that makes it possible. If you do both, people understand the importance, value and financial potential of our mission.
Blackboard currently enjoys the lion's share of the
higher education market for online courseware,
despite being woefully behind, technologically,
other vendors who cater to the corporate space.
How must Blackboard change to compete with more
advanced rivals such as Boxer, Click2Learn, and
Docent, as well as more nimble competitors in the
academic space such as WebCT and
Matthew Pittinsky: Interesting question. Frankly, I would be happy to compare our core technologies to those of any of the companies you list. Our clients certainly have, as there are numerous projects that involve Blackboard and a corporate player or just Blackboard. We work with Saba on the army project, as an example. I am very proud of our technology and development arm, although as a more education-focused person I care as much if not more about ease of use and effectiveness.
What exactly does Blackboard do? Would you give us an example of what you provide to your customers?
Matthew Pittinsky: Sure. We provide software in three major areas of e-Education: Learning, Community and Commerce. On the learning side, our software enables faculty to create and manage online course environments with discussion boards, chats, quizzes, assignments, etc. On the community side, our software enables institutions to bring a wide range of administrative, social, community type services online such as student organizations, concert tickets, new, etc. On the commerce side, our software enables institutions to set up student debit accounts which can be used with a student ID card or online to pay for academic materials, food, campus activities, etc. You can check out www.Blackboard.com for more…
I'm a current user of Blackboard and find many things about it somewhat cumbersome, compared especially to WebCT. What changes are coming to improve the flow of information?
Matthew Pittinsky: For those who may not know, WebCT is a Blackboard competitor in the learning side of our business. Both products have much in common and then some significant differences. We tend to be credited with a simpler, more intuitive user interface that leads to greater adoption and lower support costs, as well as more enterprise technology for scalability under the hood. WebCT has strengths as well, although I am not quite sure what you mean by information flow.
What kind of technological barriers does Blackboard face at universities and colleges? Are schools sometimes behind the curve?
Matthew Pittinsky: Good question, although lets not forget that higher education helped invent the Internet and is the leader of Internet 2. So many universities and colleges have pretty robust campus networks, and PC access. In addition, universities are unique in the breadth of their ISP services to students and faculty. The biggest barrier is training and support to take widespread adoption of Blackboard and turn it into something that truly impacts learning outcomes.
In October 2000, Eduventures.com said the (then) $4 billion higher
education e-learning market should grow to $11 billion by 2003. I'm not asking you to comment on Eduventures, but do you think those earlier analyst projections still hold water or do they need to be revised?
Matthew Pittinsky: You know, I have learned to take analyst estimates with a grain of salt. Yes, I think the fundamental growth curve that their estimate implies remains true. Education is the second largest industry in the U.S. at 10% of GDP and is a multi-trillion dollar market worldwide. The Internet has barely tapped the surface and much dislocation still remains ahead of us. This tidal wave will create some very big companies.
The bell has rung, thanks to everyone who submitted a question...or two or three. And thank you to Mr. Pittinsky. I suggest everyone keep an eye on Blackboard, and hopefully we'll meet here again!
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